Betting the Fund on the Merge | Hal Press, North Rock Digital

Hey Bankless Nation. Wow, what a week it has been. Uh, I'm actually really refreshed to get into this show, David, because we're not talking about Terra, we're not talking about UST today, we're not talking Elgo stablecoins, we're talking about one of our favorite subjects, which is ETH, Ethereum, the merge. I ran across a guy, his name is Hal Press, who started a fund and he's betting his entire fund on the ETH merge. This man is bullish on Ethereum, okay? Yeah, I think we do. And I I I wanted to uh bring him on, David, so that we could we could hear a little bit of his uh thesis because it has some similarities with ours, but he he extrapolates uh a few different dimensions like supply and demand, and uh I mean he's betting his entire hedge fund on it. So it's a pretty big deal. So uh want to talk all about that. Um I'm excited to just get into this, David. Do you have any thoughts as we uh dive in and talk to Hal?

Yeah, it's just always refreshing to hear the merge, the alpha of the merge, make its way out of the Ethereum community and into the world around it, right? And this has always been the goal. This is always the goal of Ethereum, but it's just nice to see and hear people articulate the case for the merge that aren't like deep inside the Ethereum community. Uh Hal has because Ethereum hit has this culture of building out in the open, building uh thinking out loud, you know, building transparently, there's a bunch of information for people to like lean onto. And, you know, some people have uh caught the bug, and and Hal's one of those people. And so he's been paying attention intimately, not just to like the merge thesis, but also the all core devs call meetings where people like Tim Bako and Dankrad and Danny Ryan are all talking about the Ethereum merge. Uh, and there's a bunch of there's a bunch of alpha there, and like it's just sitting out there for people to take it, and Hal has taken it.

Yeah, it's super cool his strategy. I thought this would happen. I thought investors would start like, you know, how many investors all around the world hang on every single thing Jerome Powell says, right? And uh Ethereum in the all core devs call is not the Fed. They're they're not really setting rates, but they are setting like timelines for the merge, right? Uh they're talking about um Ethereum issuance in the future. It's a massive amount of alpha. And so people who are smart like Hal have clued into that. And so I think he's got some insights into when the merge is coming. So I hope we cover that as well.

Some unique insights about that because he is a neutral third party that is responsible for his funds. So so he doesn't have any bias about when the merge happens. He can like approach this with sober sober eyes.

It's like uh when Taleb says skin in the game. That when you have skin in the game, there's the ultimate bet. Uh and Hell's putting his skin in the game. Anyway, guys, also want to share uh that there's still an opportunity to get in on this Opolis bankless deal. Okay, David, why don't you tell him what Opolus is and what the deal is?

Opolis is a DAO that supports other DAOs. If you have, you know, risks or a family to take care of or healthcare that you don't want to lose from your normie TradFi Web2 job, but you do want to join the world of Web3, Opolis can help. They are basically a DAO that helps you onboard yourself into the world of the self-sovereign worker, working for DAOs, working for Web3 protocols that don't really have healthcare options, but Opolus does. So it's a DAO that services other DAOs. You can also get your your payroll service by uh Opolus as well, and you can also get paid in crypto, as well as join their competitive healthcare rates because it's a collective. You join a collective, which, you know, is very, very web 3 centric. And then, of course, Ryan, if you sign up before May 25th, you get a thousand bank tokens, that's the bankless DAO token, and a thousand work tokens, which is the Opolus token. Uh, so long as you sign up and get going by May 25th. So there is a link in the show notes for you to get started. Uh, yeah. Yeah, that's the deal.

Guys, you're running out of excuses to quit your corporate job and bankless is making

Making sure that.

Yeah, that's right. This is now you can no longer say, but what about my health insurance? Because it's right here. Opolus will provide that out of the box. Uh guys, we are going to get into our conversation soon. But David, I want to ask you the question I ask before every single state of the nation, which is this what is the state of the nation today?

Oh, we are the state of the nation, Ryan, is giddy. We are giddy. I know

Guy D DY

G I D D Y. Yeah, the merge really isn't anywhere close, but you can still feel it, right? The the drum roll is out there. Uh and so like I mean if we're if we're like we're gonna have to ask Hal as to how far he way uh how far away he thinks the merge is, but if we're like, I don't know, six months away from the merge and I'm already giddy now, I think you can imagine how much more giddy I'll be in the future, Ryan.

Well look, we re need reasons to be optimistic right now uh because the uh looks like the bear market is in full effect. Crypto prices have been going down lately. So uh stay tuned for Hal's case on why he is bullish on ETH going into the merge and why he is betting on it. We will be right back in just a minute, but before we do, we want to thank the sponsors that made this episode possible. Bankless Nation wanted to introduce you to Hal Press. He's the founder of North Rock Digital. Hal is doing something really unique. He's betting his entire hedge fund on the merge. Okay, he's been tuning into Ethereum All Core Devs Calls, paying a lot of attention to the progress that's been made on the merge. Uh, we were talking about setting up this episode a few times previously, but he said, no, not ready yet, not ready yet. Now he's ready. So what does that tell you? Uh of course, the great thing about Ethereum is all of this information is out in the open, and Hal is certainly taking advantage of all of that with this case that he's about to give us. Hal, welcome to Bankless. How are you doing?

Thank you. Nice to be on the show.

Uh, can you start with just the elevator pitch, the high level? Why are you betting your entire fund on ETH and the merge? Why does that make sense?

Yeah, I mean,

so at a high level,

I think that there's a strong fundamental case. Um,

and we could talk about that the whole episode if we wanted to, but really, I think what differentiates it from other fundamental cases, because quite frankly,

I think the

the crypto space doesn't trade on fundamentals so directly. I think what ends up happening is that the assets trade a lot more in line with supply and demand. And

Just where the price can find a leak equilibrium between buyers and sellers.

And as a result, I think ultimately the most important factor is about structural supply and demand factors.

And,

you know, we see that with the Bitcoin halving event every four years. And it

is understood well in advance, but yet it seems to have an impact every time.

And so, in my opinion, the merge is the most powerful structural flow catalyst to ever occur in the crypto space.

And the

in my view, it's very, very hard to price those in. And so I expect it to have a dramatic impact.

So that's really the crux of it. And then there's a lot more detail to get into around that.

So a lot of people

Yeah. So I have another, it's an interesting point that you raise. And in my opinion,

it does trade on narratives, but generally what happens is that

actually, I think about this in a lot of markets. In my opinion,

price leads narrative,

not the other way around. So generally, price will move for some reason. Usually it has to do with some technical factors, and the narrative will form to try to explain why that's happening.

And if you can identify something where you have that structural force that's going to move the price and you can see a narrative that's going to be strong and sticky and catch on to reinforce it,

that's when you get those moves. But I find that

the price actually is what leads the narrative and not the other way around.

And so

you could have a narrative that makes a lot of sense, but it doesn't catch on. Why? Because the price isn't moving. And so, in my opinion, actually, I think the flows and the price lead and the narrative follows.

This is a really important point. And exactly the reason we wanted to bring Hal on is because this focus on supply and demand, I think you'll hear that a lot throughout this episode, is really the lens through which Hal views uh Ethereum and uh and the merge event. Um so before we unpack that, and I feel like we're gonna spend the rest of this episode actually unpacking everything you just said in summary. Can you give us some context? Like, how did you even find ETH in Ethereum in the first place? Why did it why did it capture your attention?

Yeah, so I think, you know, I think one useful thing to discuss before we get into sort of how I landed on ETH and the Ethereum ecosystem is kind of

some context around how I think about crypto assets in general. And I think

there's a lot of

consternation and kind of struggle to try to value these assets. And the main reason is because they're unlike any other asset. They sort of fill this hybrid role.

In my opinion, crypto assets really derive value from three different sources. One, as the name implies, as a currency.

They are currencies of their native economies. They are units of exchange in that economy. And you need them to transact in the economy. And I think that creates some demand for the assets as the economies grow.

But it's much easier to sort of gauge that on a qualitative level than a quantitative level. It's very hard to say quantitatively what that implies for a valuation of an asset.

But I do think that is one mean of value accrual. But beyond that, I think the term cryptocurrency is somewhat of a misnomer because

they're not really currencies purely in that sense of it. I think they also have a lot of other aspects. I think the second,

Primary aspect is as a store of value, a la gold. So, you know, gold does not produce any cash flows.

Um, it's not really used as a unit in exchange, but it still has accrued historically a tremendous amount of value over time. Why? Because people have faith that it will be scarce and because it will retain value over time. And I think certain crypto assets also tap into that

store of value,

value pool as well. I think obviously Bitcoin is the first one that comes to mind, and it has certainly been the most successful at accruing that value.

I think personally that ETH has a good chance of continuing. I think, I think if you had to rank them, Bitcoin would be first and ETH would be second in terms of store value. And I think

that ranking will trend more in the ETH direction post merge. And we can get into a little bit about that specifically if you want later.

But then the third factor that I think is really underappreciated

is I really do think of crypto assets as equities. And I think, especially when you talk about L1s, the point that's really kind of underappreciated is that the second that you move to proof of stake,

The actual cryptocurrency becomes very akin to an equity stake because the actual revenue and profit generated by the network actually accrues to the holder of the token.